PACRA Maintains Entity Ratings of Inbox Business Technologies Limited

IT industry contributes 1% in Pakistan’s GDP through local sales and exports. Export of IT services are estimated to contribute ~$ 2.6bln to the GDP. The largest contributor remains IT consultancy (~35%). Followed by the growth rate of export of software (14%), other services (13%), and software consultancy (8%). By keeping in view the massive demand of IT skills, the government took the initiative and established incubators and IT parts. This initiative aimed at fostering industry growth and cultivating a conducive ecosystem for enterprises and startups.
The ratings are indicative of Inbox Business Technologies Ltd.'s ('Inbox' or 'the Company') affiliation with a robust corporate entity, namely the Dawood Hercules Group. The product line of the company includes Enterprise Management Service (EMS) with the revenue of PKR: 353mln in 3QCY23, Digital Security and Intelligence (DSI) with the revenue of PKR: 562mln in 3QCY23 and Citizen Services and Customer Experience (CSX) with the revenue of PKR: 1.5bln in 3QCY23 in both, public and private sectors. EMS encompasses providing customer support, IT outsourcing, warranty, remote assistance, and maintenance services. DSI includes Web Management Services (WMS), which is technical facility deployed on internet gateways in Pakistan, to detect and block illegal international voice calls and manage internet traffic. Apart from this, CSX involves the provision of IT related services to the public sector. Inbox business technologies enjoys a competitive edge as it solely provides IT solutions. The renewal of future local and international projects will bring significant growth to the company, especially the renewal of contract with the Excise and Taxation department, for the provision vehicle registration cards. The financial risk of the company is associated with the coverages and working capital cycle of business expressing the interest coverage ratio 3x in 3QCY23 (3QCY22: 11x) and working capital cycle days of 106 days in 3QCY23 (3QCY22: 56 days) While a reduction in coverages and an extended working capital cycle present a cause for concern, the company anticipates that these challenges will be mitigated through future contracts. The Subordinate loan represents support from the sponsors and is considered as added support for company’s rating.
The company's ratings rely on its capability to uphold margins, achieve robust coverages, and sustain essential cushions while exercising discipline in working capital management. Continuous sponsors support remains indispensable for ratings. Any decay in the cashflows and coverages will be having a negative impact of the company’s ratings.

About the Entity
Inbox Business Technologies Limited (the Company) is a public unlisted company. Primary business activity of the Company involves provision of technology services to the public and private sectors. The Company was incorporated in 2001, by Mr. Ghias Khan (CEO of Engro Corporation Limited) along with his friends, Mr. Mir Nasir and Mr. M. Ali. However, later, it was acquired by Dawood family.
Inbox's majority shareholding resides with Dawood Investments (Pvt.) Ltd. (formerly known as Patek Pvt. Ltd.), a holding investment company held by the Dawood Family. The Company's Board is chaired by Mr. Arif Janjua. Mr. Mohsin Ali heads the Company as its Chief Executive Officer. He is supported by a team of experienced professionals.